Insights
A multilateral collateralized digital currency as an instrument of influence for oil-exporting states
Gulf States are in the front line of the strategic competition between China and the United States. The former seeks to secure a steady supply of oil while extending its economic and technology influence. The latter continues to play a dominant role in enabling the defence of Gulf States while leveraging this position to keep them from embracing China. This situation is also reflected in the recurring topic of the dedollarization of global oil-trade and China’s desire to settle oil-purchases in its own currency, the Renminbi, which for a variety of reasons does not yet serve the interests of Gulf-based oil-exporters. This report argues that a multilateral and oil-collateralized digital currency (MCDC) could provide like-minded Gulf oil-exporters with a tool of partial monetary policy independence and enhanced global influence, ultimately enabling them to carve a more independent policy that serves their own interest rather than the one of either of the two super-powers.
How can GCC countries achieve equilibrium in the China-India competition?
The competition between China and India continues to grow, driven by territorial disputes and China’s growing strategic dominance and assertiveness. Both countries are also increasing their demand for energy and raw materials to fuel their economic growth. In our latest report, Dr Naranayappa Janardhan (Anwar Gargash Diplomatic Academy) and Nicolas Dunais (Azal Advisors) argue that Gulf policymakers should pursue a balanced relationship with China and India, avoid “picking sides”, and where possible, encourage them to cooperate rather than compete in the commercial and security realms.
Nudging GCC citizens to sustainability: the imperatives of cultural awareness & local knowledge
Many GCC governments have established or are in the process of establishing behavioural economics (“nudge”) units as an additional instrument of policymaking, with the support of Western experts. With sustainability considerations becoming more central in the policy development process, nudging has a key role to play in effectively changing citizen behaviour. Yet local specificities mean that replicating models which have worked abroad is fraught with risk: social habits among GCC citizens can result in nudge campaigns having the opposite effects to the ones intended. In this context, it is essential to leverage local expertise to ensure campaigns are effectively delivered and government efficiency is maximized.
Diplomacy, deconfliction and reconstruction: opportunities for a joint US-Saudi effort in Yemen
While American interests in Yemen have for years focused sharply on counterterrorism, the rise of the Houthi movement has expanded these interests to protecting the territorial integrity of Saudi Arabia and securing adjacent maritime lanes essential for the flow of oil. The Biden Administration’s decision to re-engage diplomatically in efforts to resolve the Yemeni conflict represents an opportunity for Saudi Arabia and the broader GCC to work together towards a peaceful resolution, through a sustained engagement with all involved parties, including Iran, if recently resumed nuclear talks progress sufficiently to add regional-security issue to the agenda. While the United States can lead the engagement with Iran, Saudi Arabia and the broader GCC should be ready to play a major role in state-building and economic reconstruction once conditions enable it, including in the northern part of Yemen where marginalization of communities has been a contributing factor to the current crisis. This will also entail a recognition by GCC states of the limitations and constraints of current UN resolutions.
The GCC in the Eastern Med: balancing economic and security interests
The Eastern Mediterranean continues to be an area of growing importance for some GCC States, on the back of commercial interests, political antagonism, and broader security concerns. In the last years, Gulf involvement has weighed more heavily towards the security dimension, in no small part due to the projection of the GCC rift into the region. Yet if Gulf Arab States are to reap the dividends of their much-needed investments in the region’s commercial infrastructure, it will be in their interest to minimize military posturing and focus instead on economic partnerships.
Outlook for the petro-yuan and implications for GCC monetary policy
Is the new drive behind the internationalization of the renminbi a game changer for hydrocarbon trade between China and the GCC? For the GCC’s oil & gas exporters, a shift towards the petro-yuan has long been perceived as detrimental to the strategic security partnership with the United States. In our latest report, the Atlantic Council’s Jean Francois Seznec and Azal Advisors Managing Director Nicolas Dunais argue that the combination of energy-flow rebalancing, loose US monetary policy, and financial reforms in China are paving the way for a broader acceptance of the renminbi by Gulf hydrocarbon exporters while minimizing risks to the relationship with the United States.
GCC food security: mitigating the impact of climate risks among supplier countries
While GCC states have proven food-resilient during Covid-19, the looming effects of climate change on food security warrant efforts to develop adapted environmental and trade policies. In particular, GCC states need to place more emphasis on trade relations, yet also understanding the climate risks in producing countries to ensure future supply chain sustainability and thus food security.
A strategic approach to decarbonization for GCC hydrocarbons exporters
The global trend to decarbonize economies is set to have a direct impact on the oil-exporting countries of the Gulf. The latter can however mitigate and potentially profit from this trend if they decisively act and invest in carbon capture use and sequestration (CCUS) technology, thus securing and projecting a long-term future for hydrocarbons as a valuable and sustainable economic resource.
The argument for a Middle Eastern gas grid
Covid-19 has accelerated the will of many countries to engage in a “green recovery” with a reduced reliance on fossil fuels and in particular oil and coal. Given the abundant gas reserves in the Gulf and Eastern Mediterranean, and the need for a pragmatic approach to climate change mitigation, Gulf countries could lead the development of a regional gas-grid.